Generous package sets Australia apart

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Susilo Bambang Yudhoyono, left, with John Howard on his arrival.Photo: AP

Australia is aiming to create a reservoir of goodwill
with Indonesia's President.

The Howard Government's $1 billion aid package for Indonesia
stands alone as not just the biggest commitment by any nation so
far but also for the manner in which it has been delivered.

By circumventing the United Nations and rejecting a freeze on
Indonesia's debt repayments, Australia has set itself apart even
from the US in its approach to helping the reconstruction following
the tsunami disaster.

There is reason for - and a lot of merit in - John Howard's
position. There is hardly a more vital relationship for Australia
at the moment than that with its near neighbour and, by dealing
directly with Indonesia, Australia is looking to create a reservoir
of goodwill with the new Indonesian President, Susilo Bambang
Yudhoyono.

The leaders of the two countries appeared to get on well and
yesterday's initiative clearly touched the Indonesian President,
who told the Prime Minister he would never forget Australia's
efforts.

It's priceless diplomatic capital and if managed wisely may well
be leveraged to Australia's advantage for years to come, most
notably in expanding co-operation in the war on terror. Also, the
more Australia and Indonesia work closely together and develop
mutual understanding, the more likely Indonesia will be sympathetic
to Australia's interests in other areas, including its bid to join
a dynamic and fast-growing pan-Asian economic community.

As the world's largest Muslim nation, and an emerging democracy,
the recovery and long-term prosperity of Indonesia has the
potential to do much to convince the wider Islamic world that the
West is not intrinsically hostile to it.

To date, the billions pledged by rich nations for the rescue and
reconstruction effort, and led by Australia, has overshadowed the
$50 million pledged by the oil- rich Arab states.

Mr Howard is also on solid ground in eschewing the debt
moratorium push. Pop stars, aid groups and churches have long
advocated debt forgiveness as the best way to spur development in
the Third World.

When huge slabs of government budgets are spent servicing
outstanding loans instead of being devoted to their impoverished
populations, such an idea carries obvious appeal.

But this can be a supremely inefficient way of assisting the
survivors of catastrophes such as the Boxing Day tsunami.

There can be no guarantee that this money would find its way to
the estimated 1 million people without shelter or that it would be
used to rebuild critical infrastructure. Indeed, it is almost
certain it would not.

As sovereign states, countries receiving aid cannot be easily
policed to determine how they spend money released by a debt
freeze.

In the case of Indonesia, which is still riddled with
corruption, the funds could well be siphoned off, possibly to its
military, whose equipment is in a sorry state.

By delivering the $1 billion through a joint commission closely
overseen by Australian - as well as Indonesian - ministers and
officials, the Australian model best ensures transparency and that
taxpayers' funds are not being misallocated.